QUEERTY IN-DEPTH — All charities mean well, but many fail to live-up to their lofty missions. Here are the gay community’s worst offenders.
This holiday season’s been haunted by the Ghost of the Economy’s Future, with a steady procession of Very Bad News marching out like an unstoppable phalanx of sad-faced tin soldiers. Yesterday, the Fed effectively cut interest rates to zero percent. Retail prices are in a spiraling free fall. While we’re all vulnerable, charities have been hit particularly hard, whether as a result of donor fraud or the simple fact that charitable giving is the first thing to go in hard times. Is it any wonder that Wayne Besen, of the gay non-profit Truth Wins Out, is sending emails with “Please, Stop the Sky From Falling” in the subject line?
In an effort to help you help struggling but necessary non-profits, Queerty presents its list of the five worst gay charities for your dollar.
The following organizations are ranked the lowest in terms of both organizational efficiency and organizational capacity (see methodology) by Charity Navigator, the well-regarded independent analysis site we’ve used to ensure impartiality. Charity Navigator bases its decisions on the financial data charities are required to give through their IRS-filed 990 forms.
While the site updates monthly, some of this data is a couple of years old. We included it because it’s our belief that if a charity is not filing financial statements in a timely manner, they shouldn’t get a free pass. We chose the five largest, worst-performing gay-focused charities. This means some underperforming HIV/AIDS-related charities, which scored lower than the organizations listed here but were not specifically focused on the gay community, are not on the list.
In all instances we have reached out to the respective groups and asked them for a response and we will update the site as these responses become available.
The NY-based GMHC began in 1981. Ever since, it’s been dedicated to combating HIV through awareness programs as well as direct aid to those afflicted with HIV, especially through its HIV/AIDS Hotline. While spurned by Larry Kramer, it received lavish praise in Randy Shilts’ 1987 book, And the Band Played On.
This organization’s main problem is not its efficiency. In fact, the group spends nearly 90 percent of its money directly on programs, making it one of the best in the nation. So how did it wind up on the list? Its “organizational capacity” is in the dumps. The GMHC’s revenue grows at a pitiful 0.4 percent, severely hampering its ability to grow its programs. Furthermore, its working capital ratio is dangerously low. If donations dried up, GMHC would have less than three months before it was forced to shut its doors.
Janet Weinberg, Senior Managing Director – Development and Legislative Funding responds:
“Gay Men’s Health Crisis would like to respond to the article, “Five Worst Gay Charities for Your Dollar” which appeared on Wednesday, December 17. The reporter stated the use of data that was “a couple of years old” from Charity Navigator. We were not given sufficient time to respond appropriately to the reporter as the email was sent after standard business hours, and we were alerted of the post the next morning.
GMHC is in full compliance with IRS regulations for filing Form 990 – Return of Organizations Exempt From Income Tax. A request for extension to file the 2007 report, which covers GMHC’s fiscal year ended June 30th 2008, was filed with the IRS in October, and extends the filing deadline to February 15th 2009.
A review of GMHC’s Form 990 will show that revenues have grown steadily over the last five years by 30 percent. Consolidated revenues for fiscal years 2008 and 2004 were $31 million and $23.7 million respectively. Audited results at June 30, 2008 show working capital $10 million, and cash $8 million.
The article stated that GMHC was ranked by two criteria: (1) Efficiencyâ€”of which we received four stars from 2006 and credited as “one of the best in the nation;” and (2) Capacity of which we received two stars from 2006. Yet, the melodramatic focus of the article leaned more to the alleged “failure” of our capacity rather than the success of our efficiency. Our organizational capacity has a Â½ year of reserve. This is not a failure.
Lastly, the article stated that if “donations dried up,” GMHC would have to shut its doors in less than three months. This is a misrepresentation of the agency’s financial position with only 18% of the budget consisting of contributions. GMHC has a well diversified portfolio which means that cash is not generated from only one source. It would take a large national disaster for all sources to dry up.
During this time of recession, it is not helpful for queerty.com to bash community-based organizations that provide services to LGBT folks and people living with HIV/AIDSâ€”especially since the article was not evidenced-based on the latest data. “
Billing itself as the gay movement’s “premiere think tank”, NGLTF, founded in 1973, is in the business of training local, state and national activists and giving them the resources and information needed to promote equality and fairness measures.
NGLTF’s big problem is that it’s bloated with administrative expenses. Only a little more than half of the money raised is actually used to fund the organization’s programs. Out of the $7.3 million NGLTF spends annually, nearly $3.8 million is sucked up in red tape and bureaucracy. That said, its fundraising efforts are largely effective and efficient, and the Foundation’s revenues grow at a healthy 35 percent. But that money is being sucked up in administration; program expenses are only growing at 3.3 percent.
Rea Carey, Executive Director, National Gay and Lesbian Task Force responds:
“The National Gay and Lesbian Task Force builds lesbian, gay, bisexual and transgender (LGBT) political power from the ground up. For 35 years, we have led the fight for freedom, justice and equality for LGBT people. The Task Force monitors and works to reduce all non-programmatic costs so that we can carry out our work efficiently and effectively. We continue to be an organization that accomplishes an astonishing number of concrete advances for our community, given our relatively limited resources. While our rating on Charity Navigator appears to be lower than some other colleague organizations, we believe this has to do with the method of expense allocation used by different organizations. The rating system doesn’t take into account these nuances, meaning a full picture of an organization’s stability and effectiveness is not presented.â€
There is only one reason New York City’s Lesbian, Gay, Bisexual & Transgender Community Center is on this list, but it’s a biggie: Put simply, the Center is obsessed with fundraising, but horrible at doing it effectively. For instance, for every dollar you give to the center, a quarter will be spent on getting new donations. Whether it’s through lavish charity events or promotional materials, the Center is so focused on getting more money that it’s not wisely spending the funds it has. Currently, the LGBTCC has spent so much on fundraising that it’s running a deficit. Our suggestion: Start saving some of that cash. The Center has less than three months’ worth of operating costs stored in the bank, and considering the breadth of services it offers, living from hand to mouth is a dangerous strategy.
UPDATED:Cathy Renna, Managing Partner of Renna Communications responds:
The Center has received a good rating with the Movement Advancement Project (MAP) which publishes reviews of all the major lgbt organizations each year. I would suggest you look at the MAP reviews online to compare.Historically, the Center has been well-rated by the Better Business Bureau as well.
Charities Navigator evaluates charities on two primary factors; their financial health and their utilization of capacity.
There are several problems with the way they calculate data:
1) They produce financial information based off the charities form 990, which although is a snapshot of the organization, is not considered a substitute for the annual audited financial statements. Any financial analyst would be able to obtain more useful information from an audited financial statement because f/s are prepared in accordance with generally accepted accounting principles (GAAP), which tell the reader a lot more information than a summarized tax filing.
2) For example, the financial statements reflect a deficit of approximately $361K. What the audit reflects, however is that depreciation expense for the year was $391K. Since depreciation is a non-cash item, it reduces the surplus but does not require a cash outlay. Therefore, as note 11 to the audited financial statements point out, without this accounting entry to comply with GAAP, the Center would have had a surplus of approximately 29K.
3) In addition, the balance sheet or statement of financial position reflects, and is supported by footnotes 6 and 7, the Center owns a building that had an initial cost of $13.6 Million but only has a mortgage of $1.5 Million. This highlights the effectiveness of prior capital campaigns and speaks to the efficiency of the Center on a long term basis, not just over one year. In addition, the space (and Richard can give you the history of that, which is pretty interesting in and of itself), gives the Center the ability to provide usable space to many user groups that are directly related to the Centerâ€™s mission. Because the user groups are not direct programs of the Center, they do not appear as expenses on their books, financial statements or form 990. Therefore the Charity Navigator measurement of efficient use of resources is grossly misleading.
4) The Center has temporarily restricted net assets of approximately $725K. What is not apparent on a form 990, but is explained as part of the footnotes of an audited financial statement is that this $725K represents donations from the public (foundations, etc. ) that are designated for specific programs that will take place in the future. Therefore, the Center has a strong base of future support. (What this also means is when the Center spends this money in the future, it will be applied against this net asset balance and not future revenue streams, which in this uncertain economic climate is a very positive development.)
5) The audited financial statements contain a statement of cash flows, which a form 990 does not. The statement of cash flows reflects that the Center had a positive cash flow of $240K in the 6-30-07 fiscal year.
I hope this was helpful. We certainly do not agree that the Center merits this kind of criticism and is in fact a very good place for our community to donate their resources as they see fit.
There’s little positive to say about Ferndale Michigan’s Affirmations Community Center, which serves the Detroit area. A full 39 cents of every dollar you give will wind up going to fund other fundraisers, making it the worst gay charity by this measure. In addition, Affirmations is bleeding cash at an alarming 9.3 percent a year, making CEO Leslie Ann Thompson’s salary of $99,317 totally unwarranted. It may not seem like much, but it’s a whopping seven percent of the annual budget. She should be fired. Hopefully new leadership will turn this floundering center around.
Leslie Ann Thompson, CEO of Affirmations, responds:
As Matt Foreman wrote, â€œCharity Navigator and similar groups rely on an organizationâ€™s tax returns (â€œ990â€™sâ€) to do their analyses.â€ The viewpoint posted here on Queer TY is based only on the current year and does not look at the historical or current context in which the organization is growing.
In 2006, Affirmations ranked with 3 stars and scored an overall rating of 55.95 â€“ that would have placed it in â€œThe 5 Best Gay Charitiesâ€ if scored in 2007. In 2007, Affirmations was deeply involved in completing a $5.3 million capital campaign to build a new home that would dramatically expand programs and services to the immediate LGBT Detroit-area community. When capital campaigns are launched, there is no separate nonprofit set up to raise the money for that goal. All fundraising activities and expenses come right out of that same nonprofitâ€™s accounts and they show up on the annual 990.
In January of 2007, Affirmations still lived in a run-down 100-year-old apartment building. By the end of the year, Affirmations had moved to a new LEED-certified, award-winning building and doubled the number of people served almost overnight. The campaign that made that goal a reality cost money.
Not only is it typical and expected to have an increase in fundraising expenses in order to accomplish such an enormous task, it also poses additional challenges: individual donors who give to a capital campaign may feel stretched in their giving and may not be able to continue giving to an organizationâ€™s annual operating budget â€“ the part that keeps the doors open and the programs and services growing. In order to successfully complete a capital campaign and continue to run a one million dollar budget means additional resources are spent in fundraising.
A useful evaluation of our LGBT organizations should consider all the factors that are involved in an organizationâ€™s work that includes not just the 990 but also monumental successes and dramatic increases in service.
And the worst gay charity for your dollar?
While nobody can question the mission of the Project or its 24-hour, Spanish/English bilingual hotline, there’s nothing good to say about the way it’s run. Seven out of 10 charities spend more than 75 percent of their budget on program expenses. The Project spends a measly 56.6 percent. The rest of the money goes to a bloated administration and fundraising. A look at the Project’s operating expenses is a look at an organization in its death throes. The group runs a 10 percent deficit and has virtually nothing saved for a rainy day. Without constant donations, this charity would be forced to shut down within six weeks. In such a dreary position, Executive Director Clarence Patton shouldn’t just have his $102,356 salary yanked; he should also be fired.
UPDATE: And Patton stepped down in July.
Sharon Stapel, Executive Director of The Anti-Violence Project responds:
The Anti-Violence Project has always focused on providing necessary direct services to lesbian, gay, bisexual, transgender, queer and HIV-affected victims of hate violence, domestic violence, sexual assault and stalking. AVP is disappointed that Queerty did not call us directly prior to running this story, but instead sent an e-mail to our website general administrator after 5:00 p.m. last night. Had we had an opportunity to talk with Queerty, we would have explained to them that their information is no longer current and that AVP brought in a new director of development, Joseph Barretto, in May 2008 and a new executive director, Sharon Stapel, in July 2008. Since then, AVP has bolstered regular practices that will assure accurate reporting of our financial information and the fiscal health of the organization. As well, in FY09 we overhauled our finance department and brought in a fiscal management consultant that specializes in working with non-profit organizations to create a transparent, clear and accurate picture of our fiscal management and health. Although it is true that AVP, like many other not-for-profits in the current climate, is facing tough economic times, we have taken preventative steps in preparing for the rest of FY09 and beyond including reducing expenses and budgeting for a reserve. We would welcome the opportunity to meet with Queerty and to have a more thorough dialog about AVP and the critical work we do. It was a pleasure to meet Queertyâ€™s David Hauslaib in October 2008 at our Courage Awards where he presented an award; at that time we expressed our desire to meet with him and Queerty and we continue to hope that we can do so.
We’re sorry we didn’t have a chance to talk to AVP sooner as well. We used the AVP’s listed press contact to get in touch, which so happened to be the general administration email. It’s encouraging that AVP has begun to address the many fiscal problems it faces and when it releases its finances next year, we look forward to reassessing the organization.